FACTS AND ANSWERS

What does CCMA stand for?

CCMA stands for California Cannabis Manufacturers Association.

Who is behind CCMA and why did the group get started?

CCMA president Kenny Morrison says, “I called Kristi (Knoblich, COO) at Kiva Confections, and asked, ‘how important is self distribution to your brand on a scale of 1-10’ and she said, ‘a 10’. Self-distributing our brands is how we both established our great reputations.”

We want to ensure farmers and manufacturers have a direct connection to the retailer. The big misconception that we want to disprove immediately is that we are against the distribution license type. Nothing could be further from the truth. We believe the state needs many many more distributors! We believe farmers and manufacturers should be able to hold distribution licenses as well a manufacturing or cultivation license.

Who makes up the association? Who is the CCMA?

The CCMA is “made up of the biggest manufactures of cannabis products in the state of CA”. We represent many of the oldest and most trusted brands, many of which are members of the board. Jetty Extracts, Cheeba Chews, Altai, Kiva, VCC Brands, 710 Combinator, Herbalcure, Hashman Infused… Some of us are farmers as well. More can be found on our website, www.cannabismanufacturers.org.

What are the details of the ensuing battle taking place on the distribution front?

Special interest groups want to create “carve outs” so they can control the cannabis industry. Instead of running a successful, competitive business that offers a valuable service, they want protection by legislation that favors their business. That’s old school, and more of the same—the cannabis industry should be more evolved than that.

These special interests don’t want to see regulations that allow pre existing businesses—the very businesses that inspired the license types to be created— to participate. They are trying to block all of us and insert themselves in our place—with a system of closed distribution.

The scary thing is this makes it harder for the masses to participate. For maximum participation in the new regulated economy, we need many more distributors and testing laboratories than it appears we will have—if we don’t influence the policy makers, lab testing will take so long that companies won’t get their products to market quickly and they will suffer, along with the cannabis patients. Entrepreneurialism suffers if closed distribution wins. Illicit market will be slower to disappear if closed distribution wins.

How will your organization help create jobs?

If more people get distribution licenses that will increase the number of participants in the cannabis economy thus creating more jobs and opportunities in the supply chain. The more distributors there are the more options consumers will have at the dispensary.

Why is a mandatory three-tier distribution detrimental to cannabis manufacturers? Who is behind this and why?

As currently written, medical cannabis law passed in 2015 will not allow manufacturers to also hold distribution licenses when the law goes into effect in 2018. Therefore, we will not be able to distribute our own products or the products of others as we have been doing for years. “The laws were modeled after our businesses, yet our participation, our ability to hold the licenses we were examples for is under attack.”

What are some of the more favorable options the CCMA members need?

Our request is actually quite simple. We need both a distribution and manufacturing license.
“We have no problem with the distribution model, in fact most of us invented it. It’s not that we are against the distribution license; we just want to hold a manufacturing and distribution license, and we are willing to adhere to the same standards and regulations as everyone else. We just want to participate in distribution, and not divest ourselves of the businesses we’ve developed.”

Why is self-distribution popular among cannabis manufacturers? How is it being done today? How long have manufacturers been at this?

For a manufacturer to be successful, they have to create a brand. For a brand to be successful, it has to promise quality. Manufacturers are incentivized to create quality products; no one cares as much about a brand as the manufacturer. And product quality isn’t only important to the consumer, its also important to the retailer. In cannabis, a large part of the brand’s reputation is dependent upon the product being delivered to the retailer on time, every time, with accuracy and in perfect condition. The manufacturer is dedicated to delivering its products to the retailers, and making sure that the quality assurance and standards as well as their customer service and reliability is meeting their customer’s expectations.

If distribution is fractured from manufacturing, manufacturers lose their direct connection to the brand. Manufacturers take a hit, but it’s really the consumer that suffers with lesser quality, more expensive products.

Is the chosen model of CCMA’s position framed after an existing model? How does this model provide for choice and prevent monopolies by powerful corporate distributors?

A great model to look at is craft beer in California. Popular beer brands were able to grow into successful companies because they were allowed to hold both (manufacturing and distribution) licenses, hence giving them the opportunity to get their brand off the ground. However this was not allowed for spirits, instead they had to go through distributors looking for large brands to fit their model, and the options now available are large companies. There are far fewer players in the spirits industry than craft brew, today.

Why do you think 3rd party transportation regulation is an outdated concern now that we are in a new era with track and trace software?

I don’t think regulation is ever an outdated concern. There’s regulation that has been implemented properly as well as poorly. This is a result of a lack of knowledge regarding the business parties involved.

Third party transportation is absolutely necessary for some brands and absolutely unnecessary for others. We just want to preserve the option for a manufacturer to choose if they want to distribute themselves or rely on an outside entity to do it for them.

In a nutshell can you tell us some of the hurdles that manufacturers are facing today?

“The industry is built on relationships and it takes a long time to form those relationships. Store owners don’t trust everyone who walks in their door, it is the relationships that get your product on the shelf”

What are the good and bad with Prop 64?

The downfall of Prop 64 is the length of time it will take to implement and the best of Prop 64 is the social justice that is currently taking place. The only way to legally buy adult use cannabis today is to grow it or have it gifted to you.

What qualifies a manufacturer to join CCMA?

Currently by invite only. We are representing the interests of all manufacturers. It was by being able to distribute our products that our businesses have been able to succeed. We don’t want to see that right taken away form us, nor do we want to deny that right to the businesses that will follow in our footsteps for years to come.